NEWS RELEASE: New $25M Fund officially launched, investors named

Warren Hanson, president & CEO of the Greater Minnesota Housing Fund, announced today that it has officially launched the $25 million NOAH Impact Fund, a new impact investment fund designed to acquire 1,000 units of rental housing and maintain affordable rents for 15 years.

Older Class B and Class C unsubsidized, private rental housing serves more households in the U.S. than subsidized housing, but today it is at risk of losing its affordability as prices for these properties rise dramatically, along with rents. These conditions are causing the displacement of thousands of low-income families and individuals throughout the Twin Cities metropolitan area.

The NOAH Impact Fund has raised $25 million in social impact capital from Minnesota foundations, community banks and state and local government. The fund will begin making investments in June 2017 with the goal of acquiring 1,000 units of naturally occurring affordable housing (NOAH) in the Minneapolis-Saint Paul metropolitan area over the next three years.

“The NOAH Impact Fund is our response to the crisis of the loss of affordable housing in the Twin Cities metro,” says Fund Manager Rachel Robinson. “We are grateful for the array of partners who’ve come together to preserve the affordability of rental properties and to prevent the displacement of low-income individuals and families.”

In addition, Freddie Mac (OTCQB: FMCC) is making up to $100 million in debt available in first mortgage financing as a complement to the equity financing to be provided by the NOAH Impact Fund. Freddie Mac Multifamily is one of the nation’s largest investors in affordable rental housing.

“Preserving NOAH is critical to enabling people of all incomes to live in strong, vibrant communities,” says Corey Aber, Manager of Freddie Mac Multifamily Community Mission and Impact Finance. “Teaming up with the NOAH Impact Fund is an important opportunity to both preserve affordable housing in the Twin Cities metro area and demonstrate innovative new models that bring national and regional organizations together to make a difference in communities around the country.”

Mary Tingerthal, Commissioner of the Minnesota Housing Finance Agency, says she is pleased the state agency is able to participate in the Fund: “Minnesota Housing has tools and resources to help preserve subsidized affordable housing, but there’s little we can do in the unsubsidized arena. The NOAH Impact Fund is an innovative approach that helps the state agency go above and beyond what we can typically do.” The preservation of unsubsidized housing stock is the most cost-efficient strategy to maintain a healthy mix of affordable housing options across the region.

The NOAH Impact Fund will have regional impact by concentrating its efforts in the 7-county metro where properties are now being acquired at record pace by national investors who view the Twin Cities metropolitan market as a prime investment opportunity.

Hennepin County was the lead investor in the Fund, making the initial $3 million investment. “Access to affordable housing is crucial to creating a successful and stable life,” says Jan Callison, Hennepin County Board Chair. “As Hennepin County works to address the needs of our clients, we look to partnerships like this one which will prevent the displacement of low-income renters in Hennepin County and ultimately reduce the need for county assistance.”

The McKnight Foundation recognizes that an adequate supply of affordable rental housing is critical to ensuring our region’s economic growth and prosperity. “Housing requires significant capital to preserve affordability,” says Kate Wolford, president of The McKnight Foundation. “Emerging efforts such as the NOAH Impact Fund are opportunities to attract new sources of capital and engage social impact investors.”

The community banks expressed their interest in supporting local neighborhoods and promoting family stability.

Says Erick Maki, Vice President of Commercial and Nonprofit Banking at Bremer Bank: “We recognize that housing is the foundation for stable families and healthy communities. We believe that stable housing is a must for working families, and it contributes to a strong Twin Cities economy.”

Nichol Beckstrand, Sunrise Banks President notes, “Low-income families in the Twin Cities are experiencing difficulty finding affordable housing, with many spending over half of their paychecks on rent. We are pleased to help secure the affordability of housing where our customers as well as our staff and board live.”

“We wanted to respond to this urgent situation in a meaningful way,” says Cindy Carlson, Senior Vice President of Western Bank, a Division of American National Bank. “We are pleased to play a key role in the NOAH Impact Fund knowing that this reinvestment in local communities will help stabilize lives and neighborhoods.”

Otto Bremer Trust, a charitable trust that is the 92 percent owner of Bremer Bank, saw the potential for the Fund’s innovative model and supported Greater Minnesota Housing Fund in getting the new initiative off the ground. “We invest in people, places and opportunities in the Upper Midwest, with the intent of making measureable and meaningful impact for positive change,” says Daniel C. Reardon, co-CEO and Trustee, Otto Bremer Trust. “We’re concerned as well about the loss of affordable housing in our region and are invested in helping people in our communities.”